CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT.
Warren, Black, Reed, Frankfurter, Douglas, Burton, Clark, Minton, Harlan
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
The question in the case is whether the Securities and Exchange Commission has jurisdiction to pass on a fee to be paid by Electric Bond & Share Co. to Drexel & Co. in connection with a reorganization plan filed by its subsidiary, Electric Power & Light Corp., under § 11 (e) of the Public Utility Holding Company Act of 1935, 49 Stat. 803, 15 U. S. C. § 79a et seq. We hold that the Commission does have jurisdiction.
The problem arises out of the unraveling and reorganization of the vast empire of Bond & Share, pursuant to the command of the Act. The present case is one of several phases of the various reorganization plans adopted to bring the system into compliance.*fn1 The instant phase of this system's reorganization grew out of the filing of a voluntary plan of reorganization under § 11 (e) by Electric.
Electric owned operating subsidiaries in several States and in Mexico. The plan provided that (1) Electric would transfer to a new holding company, Middle South Utilities, Inc., its holdings in those operating subsidiaries, as well as certain other assets; (2) preferred stocks of Electric would be retired by distributing to those security holders shares of Middle South and shares of another subsidiary of Electric; (3) the remaining shares of Middle South and the other subsidiary would be distributed to
the holders of the common stock and of the warrants of Electric; and (4) Bond & Share would pay Electric $2,200,000 in settlement of intrasystem claims.
The plan filed by Electric under § 11 (e) required Bond & Share to do three things: first, sell or exchange its holdings of Electric stock; second, acquire in exchange the shares of Middle South and the other subsidiary; and third, pay the cash amount in settlement of the intrasystem claims. It was not sufficient for Bond & Share that Electric get approval for its plan under § 11 (e). It was also necessary by the terms of the Act that Bond & Share also get the Commission's approval of the steps required of it.
Bond & Share's exchange of its securities for the new securities was a "sale" under the Act, for "sale" includes "exchange." § 2 (a)(23). Bond & Share is a registered holding company. No "sale" of securities can be made by a registered holding company without Commission approval. That is the command of § 12 of the Act.*fn2 That approval is obtained, as § 12 shows,*fn3 by a procedure which submits the fees in connection with the sale to the scrutiny and approval of the Commission.
Bond & Share's receipt of the new securities was an "acquisition" within the meaning of the Act. § 2 (a)(22).
That "acquisition" was made subject to the jurisdiction of the Commission by § 9 (a).*fn4 That approval could be had only by submitting the "acquisition" to the Commission's scrutiny pursuant to § 10 of the Act, a scrutiny that includes supervision of the ...